Be the Next Agrochem Manufacturing Hub: What Should India Mull and Prioritize?

India's agrochemical industry stands at a pivotal juncture, facing both significant challenges and unprecedented opportunities. As global dynamics shift and technological advancements accelerate, the sector is poised for transformative growth. This article explores the current landscape, emerging trends, and future prospects of India's agrochemical industry, which was extracted from the presentation made by Dr. Samir Dave, Secretary of Pesticides Manufacturers & Formulators Association of India (PMFAI), at 2024 China Pesticide Exporting Workshop (CPEW) which held by AgroPages this July.

Dr. Samir Dave, Secretary of Pesticides Manufacturers & Formulators Association of India (PMFAI) made a speech at 2024 China Pesticide Exporting Workshop

The Current Landscape of India's Agrochemical Sector

India's agrochemical industry, while robust, faces a unique set of challenges and opportunities. The sector, valued at $5.37 billion in exports for 2022-2023, has shown resilience but also vulnerability to global market fluctuations. Export dynamics paint an interesting picture of India's position in the global market. The United States, Brazil, and Japan emerge as the top destinations for Indian agrochemical exports. This diversification of export markets has helped buffer the industry against regional economic fluctuations. However, recent data indicates a concerning trend – a 21.96% decline in pesticide exports in 2023-2024 compared to the previous year, signaling potential headwinds for the industry.

Despite being a key player in the global agrochemical market, India's domestic pesticide consumption remains surprisingly low compared to other major agricultural nations. Moreover, one of the most striking features of India's agrochemical landscape is the concentration of pesticide use in just a handful of states. According to recent data, four out of India's 28 states account for over 50% of the country's agrochemical consumption. This uneven distribution presents both a challenge and an opportunity for industry growth and market penetration.

The production patterns of key pesticides in India have shown notable growth. For instance, the production of mancozeb, a widely used fungicide, has seen steady increases over recent years. However, this growth is not uniform across all product categories, reflecting the complex nature of the industry's development.

State-wise consumption of agrochemical in India during 2022-23

Global Trends Reshaping India's Agrochemical Industry

The global agrochemical industry is undergoing significant changes, and these shifts are having a profound impact on India's sector. One of the most notable trends is the ongoing price fluctuations and global destocking efforts. Major global players, including FMC, Corteva, Bayer, BASF, and Syngenta, have reported negative growth in recent quarters, indicating a broader industry-wide challenge.

These price pressures are evident in the fluctuating costs of key technical grade pesticides. For instance, the price of glyphosate 95% has seen dramatic swings, dropping from peaks of over $10/kg to lows around $3/kg within a span of two years. Similar trends are observed for other important chemicals like 2,4-D, mancozeb, and imidacloprid.

Anti-dumping measures have become increasingly prevalent in the global agrochemical trade. India has initiated anti-dumping investigations on imports of several chemicals from China, including pretilachlor and glufosinate ammonium. Conversely, China has launched similar investigations into imports from India. These trade measures reflect growing protectionist tendencies and could reshape global supply chains in the coming years.

Despite these challenges, there's a silver lining – increased interest from global players in the Indian market. Companies like Albaugh and Gowan from the USA are starting operations in India, while others like Azelis are acquiring Indian firms to establish a foothold. This influx of global players is likely to bring new technologies, practices, and capital into the Indian agrochemical sector.

The landscape is positive by a series of joint ventures and acquisitions involving Japanese and Indian players. These partnerships, such as Mitsui & Co. + Nippon Soda with Bharat Insecticides, and Sumitomo Chemical with Excel, are introducing new chemistries to the Indian market. Simultaneously, Indian companies like UPL and Safex are expanding globally through acquisitions, indicating a two-way flow of knowledge and resources.

Emerging Opportunities in the Agrochemical Sector

As the industry landscape evolves, several key opportunities are emerging for India's agrochemical sector. One of the most promising areas is the Contract Research and Manufacturing Services (CRAMS) market. The global CRAMS business, valued at $220 billion in 2020, sees India contributing around $15 billion, with the agrochemical sector accounting for nearly $4 billion. This segment is experiencing rapid growth, driven by partnerships with Japanese innovators and other multinational corporations.

Global CRAMS market in 2020, by region, US$220 bn

The biopesticides market represents another area of significant potential. Projections suggest that India's biopesticides market could grow from $217.97 million in 2024 to $347.53 million by 2029, representing a CAGR of 9.78%. This growth is driven by increasing awareness of sustainable farming practices and government initiatives promoting natural farming methods.

Development of new agrochemical delivery systems presents another frontier for innovation. Nanotechnology and controlled release systems, while widely used in pharmaceuticals and cosmetics, remain underutilized in agrochemicals. These technologies offer the potential to enhance properties such as solubility, permeability, bio-efficacy, and stability, while reducing dosage requirements and environmental impact.

Domestic demand trend of biopesticide over the years (tonnes)

Top-five states, 60% of biopesticide demand

Industry Collaboration and Innovation Initiatives

The Indian agrochemical industry is witnessing unprecedented levels of collaboration between industry players, government bodies, and research institutions. A prime example is the joint initiative between the Pesticide Manufacturers & Formulators Association of India (PMFAI) and the Council of Scientific and Industrial Research (CSIR), supported by the Indian government. This collaboration aims to develop new chemical entities as target-based actives, drawing on principles closely related to pharmaceutical and medicinal chemistry.

These initiatives are focusing on emerging targets such as ion channels, ryanodine receptor modulators, and plant immunity regulators. The development of molecules like chlorantraniliprole, a ryanodine receptor modulator, exemplifies the potential outcomes of such research collaborations.

Industry players are also exploring common intermediate strategies, such as the development of (R)-2-(4-hydroxyphenoxy)propanoic acid, a key intermediate in aryloxyphenoxy propionate herbicides. Such approaches can lead to more efficient production processes and potentially new families of agrochemical products.

Technological Advancements Driving Change

Technological advancements are reshaping the agrochemical landscape. Precision farming, leveraging sensors and IoT-based technologies, is enabling more targeted and efficient use of agrochemicals. Artificial Intelligence and machine learning tools are being employed to predict optimal sowing times and alert farmers to pest attack risks.

Drone technology is revolutionizing crop monitoring and pesticide application, offering precision and efficiency previously unattainable. However, the manufacturing of these technologies remains largely dependent on imports, presenting an opportunity for domestic production and innovation.

Future Outlook and Strategic Positioning

The future of India's agrochemical industry looks promising, with projections suggesting strong growth potential. India is positioning itself as a global manufacturing hub, leveraging its low labor costs and improving infrastructure. The industry is expected to focus on developing safer, more effective pesticides, with an emphasis on biopesticides and integrated pest management strategies.

However, challenges remain. The industry must navigate complex regulatory environments, address environmental concerns, and continue to improve farmer education and product stewardship. Balancing these challenges with the opportunities presented by technological advancements and emerging markets will be crucial for sustained growth.

Conclusion

India's agrochemical industry stands at the threshold of a new era. While facing challenges such as price pressures and changing global trade dynamics, the sector is also presented with unprecedented opportunities for growth and innovation. The convergence of biotechnology, nanotechnology, and information technology is opening new frontiers in crop protection and enhancement.

As the industry evolves, collaboration between stakeholders, investment in research and development, and a focus on sustainable practices will be key to realizing its full potential. With its strong foundation in chemistry, growing technological capabilities, and expanding global presence, India's agrochemical industry is well-positioned to play a pivotal role in addressing global food security challenges while driving economic growth at home.

This story was initially published in the 2024 India Focus. Download the magazine to read more stories.

Please contact Christina Xie at christina@agropages.com if you would like to share your company story, contribute articles or advertising with AgroPages.